Scribd
Upload
12 views

Brief Notes

Chapter 2 discusses the classification of the Indian economy into three sectors: primary, secondary, and tertiary, based on economic activity, working conditions, and ownership. It highlights the interdependence of these sectors, their contributions to GDP and employment, and the historical shift from primary to tertiary sectors as economies develop. Additionally, it addresses the growing importance of the tertiary sector in India due to rising demand for services, urbanization, and globalization, while noting the challenges of underemployment and unequal benefits within this sector.

Uploaded by

dipika.sharma1307
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
12 views

Brief Notes

Chapter 2 discusses the classification of the Indian economy into three sectors: primary, secondary, and tertiary, based on economic activity, working conditions, and ownership. It highlights the interdependence of these sectors, their contributions to GDP and employment, and the historical shift from primary to tertiary sectors as economies develop. Additionally, it addresses the growing importance of the tertiary sector in India due to rising demand for services, urbanization, and globalization, while noting the challenges of underemployment and unequal benefits within this sector.

Uploaded by

dipika.sharma1307
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 5

Chapter 2: Sectors of the Indian Economy

To understand an economy we need to understand its parts/ components


Sectors
1. 3 ways to classify these Sectors:
 On the basis of economic activity:
1. Primary Sector
2. Secondary Sector
3. Tertiary sector
 On the basis of working condition:
1. Organised Sector
2. Unorganised Sector
 On the basis of ownership
1. Private Sector
2. Public Sector

A. On the basis of economic activity


1. Primary Sector
 Production of goods take place by exploiting natural resources
 Direct use of natural resources
 Dependent mainly but not entirely on natural factors
 Product Produced is natural
 Example: Cotton Production, Fishing, Mining etc.
 It is called Primary as it forms the base for all other products that
we subsequently produce
 Also called Agriculture and related sector as most of the natural
products we get from agriculture, dairy farming and forestry.

2. Secondary Sector:
 Production of goods take place by converting natural products
into manufactured/ finished products
 Indirect use of natural resources
 Involves manufacturing/ industrial activities.
 Product Produced is not natural. It has to be made either in a
factory or in workshop or in home.
 Example: Cotton cloth, Sugar from sugarcane etc.
 Also called Industrial sector.
 Also called manufacturing sector.

3. Tertiary Sector:
 Production of services take place
 Includes services that helps in the development of primary and
secondary sector
 These activities by themselves do not produce a good but they
are an aid or support for the production process.
 Example: Transportation, Storage, Communication, Banking,
Teachers, Doctors etc.
 Includes essential services

Directly helps in does not directly helps in production


Production like banking, like health ,education etc.
transportation etc.

 Also includes non - essential services like entertainment industry


 Hire skilled as well as unskilled people
 Also called Service sector as it includes activities that generates
services rather than goods.

2. Strong linkages / Interdependence / Complementarily among three


Sectors:
 The three sectors together runs the economy
 All are equally important
 They are not mutually exclusive as they are interdependent.
 Growth in one sector leads to growth in other sector and vice-
versa

3. Comparing the three sectors:


I. Contribution in production/ Output/ Gross Domestic Product
II. Contribution in Employment/Workforce (Occupational Structure)

I. Contribution in production/ Output/ Gross Domestic Product


 Different sectors produce different goods measured in different units
 How to measure the output produced by different sectors? Solution
is to take its money value
 One important precaution is to include only the value of final goods
and services.
 There are two types of goods:
a. Final Goods: Goods that are used for final consumption or final
investment
b. Intermediate Goods: Goods that are used up in producing final
goods and services or used for resale

 Why only Final Goods?


a. Final goods already include the value of intermediate goods that
are used in making the final good

b. Counting both final and intermediate goods leads to problem of


double-counting and overestimation of income

 Gross Domestic Product (GDP)


 It is the money value of all final goods and services produced within
the country during a particular year.
 It shows how economic sound or big a country is?

 How to calculate GDP?


 The value of final goods and services produced in each sector
during a particular year provides the total production of the sector
for that year
 Sum of value of production in the three sectors gives Gross
Domestic Product (GDP)
 In India, the task of measuring GDP is undertaken by a
central government ministry.

 Historical Change in Sectors


 Experiences of Developed Nations: As development takes place there is
always a sector shift from primary to secondary and then finally to
tertiary sector
 In the history also we observed:
a. Initially primary sector is the most dominant sector both in terms of
production and employment.
b. Then, Modernisation leads to growth of secondary sector
c. Finally, due to development tertiary sector grow drastically.
 In case of developing countries the sectoral shift is not the same

4. Reasons for growing Tertiary Sector in India:


 Growing demand for basic services like education, health etc.
 Growth of Primary and secondary sector
 Increase in income levels
 Growing importance of IT and communication sector
 Urbanisation
 Globalisation

Note: Limitations of tertiary Sector:


1. The benefit of growth in tertiary sector is not equally distributed
2. More people are working in unorganised sector in tertiary sector

5. Share of sectors in Employment

 Primary Sector continues to be a major source of employment


 Reasons:
a. Lack of job opportunities in the other sector
b. Farmers in rural areas have sense of belongingness to land
c. High level of illiteracy in rural areas
 Underemployment in agriculture sector – Disguised unemployment
(more people are working than actually required) It is hidden in nature.
It is a type of underemployment.
 Underemployment is a situation when people are working less than their
potential. It can be seen in rural as well as urban areas. Also can be seen
in primary, secondary and tertiary sector.
 The paradoxical situation that primary sector contributes the maximum
in employment but the tertiary sector contributes the highest in GDP can
be explained with the concept of disguised unemployment.

You might also like